Wells Fargo shares fell Friday even after fourth-quarter profit rose from a 12 months ago, because the bank warned that net interest income for 2024 could are available in significantly lower 12 months over 12 months.
“As we glance forward, our business performance stays sensitive to rates of interest and the health of the U.S. economy, but we’re confident that the actions we’re taking will drive stronger returns over the cycle,” said CEO Charlie Scharf in the earnings release. “We’re closely monitoring credit and while we see modest deterioration, it stays consistent with our expectations.”
Scharf said earnings in the most recent period were helped by a powerful economy and better rates of interest in addition to cost-cutting efforts put in place by the bank. Still, Wells Fargo’s stock fell 3.3%.
Here’s what the bank reported versus what Wall Street was expecting based on a survey of analysts by LSEG, formerly often known as Refinitiv:
- Earnings per share: $1.29, adjusted vs. $1.17 expected.
- Revenue: $20.48 billion vs. $20.30 billion expected.
Within the quarter ending Dec. 31, 2023, Wells Fargo posted net income of $3.45 billion, or 86 cents per share, up barely from $3.16 billion, or 75 cents a share, a 12 months ago.
Earnings were lowered by a $1.9 billion charge from a Federal Deposit Insurance Corporation special assessment tied to the failures of Silicon Valley Bank and Signature Bank, and a $969 million charge from severance expenses. Wells Fargo also recorded a $621 million, or 17 cents per share, tax profit. Excluding this stuff, the corporate earned $1.29 a share, which was higher than analysts had predicted.
Total revenue got here in at $20.48 billion for the period. That is a 2% increase from the fourth quarter of 2022 when Wells Fargo posted $20.30 billion in revenue. The corporate also topped earnings expectations, posting adjusted earnings of $1.29 per share, versus an LSEG estimate of $1.17.
Wells Fargo said net interest income fell 5% from a 12 months ago to $12.78 billion, and warned that the figure could are available in 7% to 9% lower for the total 12 months from $52.4 billion in 2023. The decline in net interest income was as a consequence of lower deposit and loan balances, but offset barely by higher rates of interest, the bank said.
Provisions for credit losses rose 34% to $1.28 billion from $957 million a 12 months ago, as allowances for credit losses rose for bank card and business real estate loans. Wells Fargo said that was partially offset by lower allowances for auto loans.
Wells Fargo shares are virtually flat this 12 months after rallying greater than 19% in 2023. Throughout the period, the 10-year Treasury yield topped the 5% threshold in October, before ending the 12 months below 3.9%.
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